Tuesday, October 28, 2014

Peak Empire, Take Two

[Many thanks to Gary for putting this update together.]

Based on the lessons of history, all empires collapse eventually; thus, the probability that the US empire will collapse can be set at 100% with a great deal of confidence. The question is, When? (Everyone keeps asking that annoying question.)
Of course, all you have to do is leave the US, go some place that isn't plugged into the US economy in non-optional ways, and you won’t have to worry about this question too much. Some people have made guesses but, as far as I can tell, no one has come up with viable methodology for calculating the date. In order to provide a remedy for this serious shortcoming in collapse theory, I once tried to outline a method for figuring it out in an article titled “Peak Empire,” which was based on Joseph Tainter’s theory of diminishing returns on complexity—or diminishing returns on empire. It’s a perfect problem for differential calculus, and all those microeconomics students who are busy calculating marginal cost vs. marginal revenue, so that they can look for work in the soon-to-be-defunct shale gas industry, might take it up, to put their math talents to better use. In the meantime, here is an update, and a revised estimate.

US Empire of Bases

Just to review, as the brilliant analyst Chalmers Johnson explained, the US is an “empire of bases,” not an empire of colonies. It is not considered politically correct to annex other countries anymore. Witness the reaction to Russia taking back Crimea, even though its population has a right to self-determination, and voted 98% in favor of the idea. But, had things turned out differently, putting a NATO base in Crimea would have been just fine. Still, there are quite a few US “territories” (read “colonies”) listed in the Pentagon Base Structure report, including American Samoa, Guam, Johnston Atoll, Marshall Islands, Northern Mariana Islands, Puerto Rico, US Virgin Islands and Wake Islands. We should probably include Hawaii, since in 1993 the US Congress “apologized” to Hawaii for kidnapping the Queen and illegally annexing the territory. They are not giving it back, mind you, but they don't mind saying we’re sorry, because they stole it fair and square. The same could be said for Texas, California—the whole bloody continent for that matter. But they don’t do that sort of thing any more—not too much. Sure, the US stole Kosovo from Serbia just to set up a huge NATO base there, but in general there has been a shift to controlling other countries through economic institutions—like the IMF, the WTO, and the World Bank. There has also been plenty of political subterfuge, assassinations and coups d’états, as explained by John Perkins in Confessions of an Economics Hit Man, or in Michael Hudson’s work. William Blum writes: “Since the end of the Second World War, the United States of America has…

1. Attempted to overthrow more than 50 governments, most of which were democratically elected.

2. Attempted to suppress a populist or nationalist movement in 20 countries.

3. Grossly interfered in democratic elections in at least 30 countries.

4. Dropped bombs on the people of more than 30 countries.

5. Attempted to assassinate more than 50 foreign leaders.”

Only a few of these actions—such as Iran in 1953, Guatemala in 1954, Nicaragua in the 1980’s, Ukraine 2014, etc.—are well known in the US. Now here is the key point: all of this “democracy-building” requires the US to have plenty of foreign military bases. Much of the military is outsourced, so there is no need for consent of the governed any more—just their tax money. Marching in the streets in protest is a complete waste of time. Millions of people marched against the Iraq War in 2003. Did it make any difference? Secretary of State Alexander Haig remarked during a peace march in the 1980’s: “Let them protest all they want as long as they pay their taxes”; Kissinger explained that “Soldiers are dumb, stupid animals for the conduct of foreign policy”; and CIA director William Casey made sure the US public remains completely in the dark with his famous dictum, “We'll know our disinformation program is complete when everything the American public believes is false.” (This is from his first staff meeting in 1981; it’s not a secret.) The US is completely open about its desire to subjugate the entire world—if this weren't already obvious from its behavior.

Pentagon Base Structure Report

And so, maintaining US hegemony requires an empire of bases. How many bases? Every year the Pentagon publishes a “Base Structure Report,” which lists all the property of the military including land, buildings and other infrastructure. The latest Pentagon Base Structure report lists 4169 domestic military bases, 110 in US territories, and 576 in foreign countries, for a total of 4855. But it turns out to leave out a lot: Nick Turse of TomDispatch calculated that in 2011 the number of foreign military bases was closer to 1075.  But even though a lot is left out of the Pentagon report, it is still a good data source for us to use because, for the purpose of calculating our estimate, all we are interested in is trends, not absolute numbers. Trends require that data from year to year be reported consistently, and the Pentagon appears to be very consistent in what it reports and what it keeps secret from one year to the next. So this is a very good source by which to measure trends.

Since the US public is completely in the dark, zombified and terrified by the mass media and traumatized by psy-ops like 9/11, the empire will have to collapse on its own, without their help. I’m sorry to say this, but the American sheeple are not going to rise up and help it collapse. But when will it collapse on its own? Do we all want to know when? Ok, here goes...

Peak Empire

Total US Military acreage peaked in 2007 at 32,408,262 acres, and has been declining ever since, including a precipitous drop in 2014.  This curve of military acreage follows peak oil and peak empire theory generally quite well. I haven’t done the curve-fitting exercise, but it looks a bit like a Hubbert curve from peak oil theory. The important point is, according to total acreage the US empire has already peaked and is in decline. Note that global conventional crude oil production peaked at around the same time; you may consider that a pure coincidence if you wish.

Looking at the data from 2003-2014, we see shows a bit more detail, including a sharp downturn in 2014. The drop in total bases in 2006 and 2007 seems like a bit of an anomaly, but the trend in acreage follows the peak theory.

What is even more noteworthy is the decline in foreign military bases and acreage. The US may still have control of its domestic and territorial bases, but it has suffered huge losses of foreign military bases and acreage. Since reaching “peak foreign military bases” in 2004, the US now has just 64% of them—a loss of over a third in a decade! In the case of acreage the US retains 69% of its peak acreage in 2006, so it has lost 31% of its foreign military acreage—also close to a third. If you want to guess at what's behind these numbers, you might want to look at them as the fallout from disastrous US foreign policy, as described by Dmitry in his article, “How to start a war and lose an empire.” Perhaps the people to whom we are bringing “freedom and democracy” are getting sick of being occupied and murdered? But, whatever the explanation, the trend is unmistakable.

But we still haven’t addressed Tainter's central thesis of diminishing returns on empire.  Ok, let's do that next next.

I previously showed military acreage divided by military spending declining since 1991 in constant 2008 dollars.

Bringing this up to date in constant 2014 dollars, we see that return on spending leveled off in 2010, but in 2014 the trend of decreasing returns on spending has resumed.

At the same time, US Government debt, which fuels much of this military spending, continues to climb at a steady rate, and the military acreage/debt ratio shows negative returns on debt. That is, the empire is getting negative returns in military acreage from increasing its debt burden. In their prime, empires are massively profitable ventures. But when the returns on government spending, debt and military spending all turn negative—that is when we enter the realm of diminishing returns on empire—that, according to Tainter's theory, sets them on a trajectory that leads directly to collapse.

The collapse does not have to be precipitous. It could be gradual, theoretically. But the US economy is fragile: it depends on international finance to continue rolling over existing debt while taking on ever more debt. This amounts to depending on the kindness of strangers—who aren't in a particularly kind mood. To wit: numerous countries, with Russia, China, India, Brazil and South Africa leading the way, are entering into bilateral currency agreements to avoid using the US dollar and, in so doing, to avoid having to pay tribute to the US. Just like Rome, the US empire is being attacked all over the world by “barbarians,” except the modern barbarians are armed with internet servers, laptops and smartphones. And just like Rome, the empire is busy spending billions on defending its fringes while allowing everything on the home front to fall apart from malign neglect.

Meanwhile, the US has been struggling to avoid a financial panic through lies and distortions. The US Federal Reserve has been printing $1 trillion a year just to keep US banks solvent, while selling naked shorts on gold in order to suppress the price of gold and to protect the value of the US dollar by (see Paul Craig Roberts for evidence). In truth, US employment has not recovered since the financial panic and crash of 2008, and wages have actually gone down since then, but the US government publishes bogus economic data to cover this up (See John Williams' Shadow Stats for details). Meanwhile, there are signs that the militarized police state is getting ready to face open rebellion.

Two paths down

As we have shown, return on investment in empire has turned negative: the empire has to go further and further into debt just to continue shrinking its foreign presence by a third from its peak every decade. There are two ways out of this situation: quick and painful, or slow and even more painful.

The quick one is for the US to recognize the situation, cut its losses and abandon the project of empire, like the USSR did in 1989/90. But it must be understood that the threat of military action is what keeps countries around the world in line, forcing them to soak up US debt. Without this discipline, further money-printing will trigger hyperinflation, the financial house of cards on which the spending ability of the US government now rests will promptly pancake, and the US economy will shut down, just like in the USSR in the early 1990s.

The other option is the more likely one, since it doesn't require making any large course adjustments, which are unlikely in any case. (You see, even in its dying days the USSR had slightly better leadership than the USSA currently does, which was actually capable of making major decisions.) This option is to simply keep smiling and waving and borrowing and spending until the empire is all gone. This will take no more than two decades at the current rate. Note that this forecast is based on a straight-line projection that doesn't take into account any of the positive feedbacks that may hurry the process along. One positive feedback is that a smaller empire means more countries around the world thumbing their noses at the US, escaping from dollar hegemony, and making it harder for the US to continue sinking into debt at an ever faster rate. These positive feedbacks are likely to be highly nonlinear, and this makes their effect difficult to estimate.

But a moment may arrive well before empire is all gone when the suspension of disbelief that is required to keep US government finances from cratering ceases to be achievable—regardless of the level of propaganda, market distortion, or US officials smiling, waving and lying in front of television cameras. Thus, we have two estimates. The first estimate is objective and based on US government's own data: two decades or less. But we also have room for an estimate that is subjective yet bracketed: anywhere between later today and two decades (or less) from now.

Based on these estimates, you can be as objective or subjective as you like, but if you are “long empire,” holding dollar-denominated assets and such, and if your horizon extends beyond 2034 (or less), then there is a reasonably high likelihood that you are just being silly. Likewise, if you think that NATO will come to your defense more than a decade from now, you should start reconsidering your security arrangements now, because NATO will cease to be functional on the same time scale as the US empire. Some time ago Pres. Obama issued what for him sounded like a pretty good order: “Don't do stupid stuff.” You should probably try to follow this order too, and I am here to try to help you do so.


rapier said...

US empire building has two constituencies. The first is the traditional one made up of those who seek to build a powerful nation. For their own power and glory or for citizens who bask in the glory of a great nation or the military who just needs something to do.

The second one is corporations who seek profit of course but ever more they seek sovereignty. The entire edifice of free trade and the banking/monetary system and the IMF's and World Banks work not just to enhance corporate profits and asset prices but seek to give them sovereignty, coincidentally under the US flag.

The two groups do not always agree. The Nation builders and their wars ultimately hurt corporations by hurting trade. Ukraine is the latest example of the nation builders gaining ascendancy to the detriment of corporate power. Ultimately corporations cannot have total sovereignty since it is nations, governments, whose laws establish corporations.

Stay tuned.

qwz180 said...

I think collapse isn't a bug in the societal model - it's a feature, just like reproduction and death are features of life.

Individual organisms spread their genes and their offspring compete to survive and thrive in a resource constrained environment.

Social organisms do the same, but underpinned by a set of shared cultural memes rather than genetic code.

When an empire collapses, some of the more effective guiding memes (and some of the bad ones) are adopted by the next round of competing civilizations. Some memes are discarded.

But some day, a civilization might adopt just the right set of memes that allow it to break out of this cycle - to reprogram itself to survive.

The question is, is this civilization willing to do that, or does the Universe have to wait for the next iteration? Is a civilization capable of changing its own operating memes in order to avoid collapse?

Anonymous said...

I dispatch cabs - a "fare" measure of transactions in any economy - and I can feel what's left of the US debtPonziconomy freezing up on an almost day-to-day basis. I'll be genuinely surprised if it and the current ZOG survive much beyond the 2016 election. In fact, there's a fair chance that election will be contested with lead ballots. This, when the Divisions of the urban FreeShitArmy (Blacks, Latins, White Cosmics) lose their debt-subsidized handouts, have at each other and massacre the Jewish officer class, and then boil out into the suburbs. Where they will meet well-armed opposition. This ain't Russia, Dmitri...it's going to be sudden, sustained, and bloody

Anonymous said...

Thanks for trying to put a timeline on it. Watching the market volatility has been causing some anxiety, but yeah they will shoot QE4 and drag this out as long as they can. My new career as a soil nutrient exchange specialist is still coming together and a little extra time would be greatly appreciated.

dex3703 said...

This analysis is spot-on. How do I know? NPR's Marketplace. This fawning, odious financial show cannot beat the everything's-roses drum too hard, proving that nothing is roses. Mr. Casey must be proud.

An interesting non-linearity would occur when the Republicans decide that funding veteran's healthcare and benefits is too expensive. And I do say "when", given that most military members are poor and lower class, and thus subject to the same calculus.


Anonymous said...

Paul Anderson,
Jared Diamond in his book "Collapse" has provided a couple examples of cultures that have survived, and Dmitry has given us "Communities that Abide". Note that these are small communities not "civilizations" or "Empires". So far historically some empires have survived longer than others, but all have collapsed. It seems to be an evolutionary cycle that can be prolonged, but none can escape it forever.

Unknown said...

"The US is completely open about its desire to subjugate the entire world—if this weren't already obvious from its behavior". Dmitry, love your work, but you know better. The US (whoever that is) is not open about anything. There are factions within the US State apparatus, however, they just work for a supranational organization that has been around longer than the USA has been. Those that are out in the open about a NWO and world domination have offices all over the world and have industries and governments beneath them so that humanity can't see them. they hide in the open, but yet they hide disguised by propaganda. It might not be healthy, but it would be more honest to call "them" out and identify them for who and what they are. Might help the useful idiots understand whats coming down the pike.

Anonymous said...

We do know better. We cited William Casey's quote about disinformation. Our point is that if you want to find it, the information about US intentions is all out in the open. To take you up on "Calling them out" There were the Brzezinski and Wolfowitz Doctrines never to let another power compete with the US, and the Project for a New American Century (PNAC) calling for a "New Pearl Harbor" to justify the next phase of US hegemony. There is also David Rockefeller of the Trilateral commission, architect of the "new World Order". If you want to read the complete inner logic of the covert state I suggest reading John McMurty at:

Fenixor said...

Unfortunately collapse seems to be integral to complex systems. I Just wanted to share the best timeline approximation I have found so far presented in an article by a group of Scandinavian scientists called "Peak Metals, Minerals, Energy, Wealth, Food and Population; Urgent Policy Considerations for A
Sustainable Society" (Sverdrup et al. 2012). The authors use dynamic modelling of resource exploitation, in comparison to old empires, to make approximations for resource peak, wealth peak and expected decline of a number of empires. In regards to the American empire the authors predict an expected decline between 2010-2030 (see page 524).

Unknown said...

Gary, I guess I was not looking at the big picture. Whats the difference between the Rothchilds and the Rockefellers? The Rockerfellers are American! Your points regarding PNAC and the TRIs are valid, but perhaps would be incomplete without mentioning the CFR, the Committee of 300, City of London, the controlling interests of the Federal Reserve, Bank of England (and most other western Central Banks) all of which has many members, many of which could be perceived as from the US and many not.

Corey said...

The problem with all this is in the planning. According to this, the UK empire "collapsed" in 1950 - yet it is now 64 years later and homes in london are going for millions upon millions of dollars.

Anonymous said...

Thanks for the reference! Looks like the timetable agrees.

Read McMurty. Nearly everyone you mention is included in the explanation of the "transnational money-sequence rule".

Land bubbles are rampant everywhere land value is privatized, not just in empires. Read your Ricardo, Paine, George, and Stiglitz who explain economic rent of land and the "Henry George Theorem".

Stewart said...

The OECD is the US Empire

What the United States is doing right now is consuming the OECD nations by its ownership and control of the bankrupt Global reserve currency, the IMF & World Bank…the US military is the extension of the US banking cartel…The only reason why the US empire has not collapsed yet is because it has not fully consumed its allies…however, many countries are on the brink of economic collapse as we see throughout Europe and the World…the continued US Sanctions that the EU is forced to apply on Russia has accelerated the fall of the European nations better known as the fringe of the US empire…that is why we also see a drop in oil prices. The US has thrown everything into the pot to keep its head above water…lower oil prices work in the US governments favour, but low prices cannot be sustained for long before the oil producing nations scream. The Federal Reserve is out of options and no longer buying up the US govt debt, Euro nations GDP and economic outlook is falling, while the Chinese have just surpassed the US in “Real GDP” even though they too are in decline due to reduced consumerism and buying power of the OECD currencies…the only growth within the US Industrial Capacity is in the weapons industries, and very few nations can afford to buy much of the US arms anymore. How many more Jet fighters can the Saudi’s buy over and above the 700 they already own when oil hovers around $80.00 a barrel? The US is also having a problem starting new wars to turn over their weapons mfg inventories…with the exception of Israel waging war on the Palestinian civilians and the western created Terrorist armies running rampant over Syria…Vladimir Putin is smart to hold off until the last possible moment as the longer he shows restraint, the more powerless the US becomes in stopping their own economic crash from happening…there is a Red Line though. The question is, will the US cross it?

The people of Europe will have the last say in moving away from US policy, but it wont take root until the German people decide to shift towards Russian & Chinese business options simply by necessity…once they realize that no one really needs the US, that in fact the US needs everyone else to stay afloat, will they turn away from the USA.
As for the decline in US Military Bases…We must also look at NATO military bases as an extension of the US military, since 90% of NATO is made up of the US military. Therefore the actual number of US Military Bases has not really gone down. I would argue that they have gone up in numbers especially after the US & NATO have been setting up new bases throughout Africa, Eastern Europe, Turkey and the Middle East…

In reality, economically, it is the entire OECD that is collapsing…an OECD which is really considered as part of the US Empire…and as such is currently in process of committing suicide by sanctioning itself to death…

If oil prices do not rise by the end of January 2015, you’ll know that the US and its OECD empire is on life support…and as a wounded animal it will be extremely dangerous…Vladimir Putin is very wise to wait before making a bold stand because the longer he waits, the weaker the US becomes, but it also gives him the time to build up his own forces…also, let’s not forget that once the Ukraine gets through this winter, they will be much poorer than they are now, and be in a much worse position than before, but they too will have strengthened their military by OECD supplies while filling their military ranks with a growing number of unemployed, radicalized youth…how many years will the EU/US be able to bailout the Ukraine before something gives internally or externally (EU economics)…I don’t see this going on for very long, one year, two years tops, before an absolute economic crash consumes all of Europe…however, war is inevitable either way…unless the people of Europe walk away from the US.

Red Shia said...

I think the American leadership is stupid enough and the military industrial complex powerful enough to go for 'bust' by starting WW3 for the same reasons as the Weimar republic did. Expect open war before the end of 2016!

Anonymous said...

Meant to respond. Excellent analysis. Good point about NATO. I tried to look up NATO bases and territory, but was unable to find it. Next time I figure Peak empire I will try to include NATO. thanks.